Action Plan and Contribution Log

Date Summary of Minutes and group contribution

Intended Contribution Actual Contribution
17- Sep-2017 Select the topic and start collecting Referred the journal articles, newspaper
22- Sep-2017 necessary details relate to the selected topic. articles, books and other related articles and
collected the necessary details relate to the
selected topic.
23-Sep-2017 Discus the presentation with the group and Analysed the collected data, information
28-Sep-2017 analyse the selected data and information and statistics.
and identify the need of a further research.
29-Sep-2017 Allocate the work among the group Work was allocated among the group
members. members as follows:
✓ Omesha – Analyse the key trends
of globalisation process and their
consequences for businesses
✓ Nilani - Analyse about “How
Emergence of Global Institutions
impact globalisation of businesses
✓ Ishanka- Analyse the drivers of
globalisation
✓ Keshani – Analyse the cost of
globalisation for businesses
operating in developing countries
21-Oct-2017 Team members should submit the draft Team members submitted the draft
26-Oct-2017 summarizes and identify about the summarizes and major changes were done
amendments need to be done. with new additions.
02-Nov-2017 Submission of the individual slides with the The individual slides were submitted and
04-Nov-2017 agreed amendments. the final PPT document was designed by
merging all the slides.
11-Nov-2017 Finalize the final PPT and discuse about the All the members got together and practiced
presentation method. the presentation and identified the
improvements to be made.
17-Nov-2017 Identify the final adjustments to be made. Completed the end reference list and made
29-Nov-2017 the final adjustments to the presentation
such as formatting and finalized the final
PPT.
Globalisation of Business

Group Members

✓ Omesha Piyumi
✓ Nilani Niroshan
✓ Ishanka Athapattu
✓ Keshani Wickramarathna

Global Economic Issues

Business Administration – London Metropolitan Campus
(Batch 07)
Presentation Contents

▪ Key trends of globalisation process and their consequences for businesses

▪ How Emergence of “Global Institutions” impact globalisation of businesses

▪ Drivers of globalisation

▪ Cost of globalisation for businesses operating in developing countries

▪ Conclusion
What is globalization ?

Globalization refers to the shift toward a more integrated and

interdependent world economy (Hill, 2013)

Globalization of market Globalization of production

Sourcing of goods and services from locations
Margin of historically distinct and separate national
around the globe to take advantage of national
markets into one huge market place.
differences in the cost and quality of factors of
production.
 QUESTION 01

Analyse the key trends of globalization process and their

consequences for businesses
1. Growth in Emerging Markets and Developing
Economies

Estimated
contribution to
global GDP
growth from 2016
- 2021
60%

Why emerging markets are expected to grow fast ?

• Emerging markets run the gambit on resources.

• Young working age populations

• Developing an infrastructure

Source : (IMF,2017) • Expectations of improved earnings growth in

economies like China and India
According to the IMF estimates, emerging economies (Sadler,2017)
are expected to grow two to three times faster than
developed nations
2. Cross - Border Ecommerce

According to the DHL (2016) one billion people will

be cross – board buyers by the year 2020

Why people look beyond borders ?

✓ Unique and specialty

products that aren’t available
in one country.

✓ Cheaper prices and better

quality products

✓ Fashionable products

(Rudolph, 2016) Global e-commerce sales to

grow 141%
Source : (Rudolph, 2016) between
2016 - 2021

Source : (DHL, 2016)

3. Protectionism and Anti-globalization

Brexit President Trump’s protectionist

trade agenda

The US trade deficit has encouraged President

Trump to take a hard stance towards trade with
countries such as China, Mexico and Germany
(Erken, 2017).

US Trade Deficit Trade deficit of

the US with
China is 350bn
USD in 2016

The UK has voted to leave the European Union (Hunt

and Wheeler, 2017).
4. Artificial Intelligence - AI

Artificial Intelligence is designing machines that have the ability to think and perform tasks that normally
require human intelligence. It is the intelligence of machines (PWC, 2017).

The Economic Impact of AI

AI will
cause the
Global GDP
to rice up to
14% in
2030

Source : Accenture and Frontier Economics

The economic impact of AI
✓ Productivity gain
✓ Some job displacement
Artificial Intelligence poised to double annual economic ✓ New employment opportunities
growth rate in 12 developed economies by 2030 ✓ Increased consumer demand

(PWC, 2017)
 Key Trends of Globalization , Consequences for
Businesses
➢ Reshaping Consumer Behavior
Customers have large multitude of choices in the market
and this affect their behavior.
➢ Exchange of Technology
Globalization has increased the speed of
technology transfer and technological
improvement.

➢ Economic Development for

Undeveloped Nations
Globalization provides new opportunities to
underdeveloped nations by allowing them access
to new markets around the world (Ingram, 2017).
 QUESTION 02

Discuss how emergence of “Global Institutions”

impact globalisation of businesses
Global Institutions

Institutions are needed to ;

✓Help manage, regulate, and police the global market place

✓ Promote the establishment of multinational treaties to

govern the global business system

(Hill,2013)
Global Institutions
Notable Global Institutions include ;
How emergence of "Global Institutions" Impact on
Globalization of Business

✓ Help to create a more open global business system

✓ Severe exchange rate risks

✓ Provide emergency loans to poor nations

✓ Greater competition

✓ High unemployment

✓ Social Instability

✓ It has a credit risk that must be specifically managed

✓ Increases the risk of proprietary information theft

(Gabriela, 2013)
 QUESTION 03

Analyse the Drivers of Globalization

Globalization Drivers

Hill (2013) identifies two macro economic factors that underlie the trend
toward greater globalization.

1. Decline in trade and investment barriers

2. Technological change

Other drivers are Market Drivers, Cost Drivers , Government Drivers &
Competitive Drivers.
1. Decline in Trade and Investment Barriers

• After World War II, advanced countries made

a commitment to lower barriers to trade and
investments.

• Lower trade barriers enable firms to view the

world as a single market

• Support to boost world trade growth

• Encourage the innovations

• Increment of competition among firms (more

trade will lead to firm competition)

(Hill,2013)
2. Technological Change

• Technological innovations support to lower the transport costs

• Improvement in transportation technology in air, sea & rail systems

• Microprocessors , telecommunications enabled the computing and communication at affordable cost.

• Development of the internet and world Wide Web have created e-businesses. It allows to buy or sell
goods though internet all over the world. ( E commerce)

• Telecommunication development – mobile phones, land lines, satellite phones, VOIP

(Bauernfeind, 2006)

Internet Users Worldwide 2014 -20120

Source : eMarketer, April 2017

 3. Other Drivers

Market Drivers Cost Drivers

As local markets become more and more Sourcing efficiency and costs vary from
structured, the opportunities for growth are limited country to country and global firms can take
and global expanding is a way most organizations advantage of this fact (Czinkota, 2011).
choose to overcome this situation (Czinkota, 2011).

Competitive Drivers

• More imports and exports lead to a huge global competition.

• Product different due to competition.
• High levels of trade, competitive diversity, and interdependence increase the
potential for competitive globalization (Czinkota, 2011)
 QUESTION 04

Cost of globalisation for businesses operating in

developing countries
1. Threat to Local Industries

• Most local industries in developing countries lack the knowledge, skills and
resources to compete with developed markets.

• There are local industries in developing countries which need protection from free
trade.
(Ogaboh and Odu, 2013)
2. Brain Drain
➢ Globalization enables workers to move freely.

➢ Highly qualified professionals are moving to developed countries for better pay and
developing countries find it difficult to hold onto their best-skilled workers.

➢ Developing countries are experiencing shortage of qualified staff to run local

institutions.
(IMF, 2000)

The majority of migrants

originating from middle-
income countries live in a
high-income country.

Nearly half of
all international
migrants
worldwide were
born in Asia.

Source : International Migration Report 2015 Source : International

Migration Report 2015
3. Environmental Cost
Developing countries own a higher percentage of
natural resources. The globalization has increased
the use non renewable natural resources. It has also
contributed to increased pollution (Omoju, 2014)
4. Cultural Effects
Many developing countries cultures has been
changed through globalization, and became
imitate others cultures such as, America and
European countries. This might lead to destroy
their own culture, traditional, identity, customs
and their language (Hamdi, 2013).
 CONCLUSION

✓ Countries can not survive or grow in isolation, so adopting to globalization to get benefit is a
must.

✓ Proper structural changes should be adopted in most suitable ways to the country.

✓ While moving with globalization, governments should take measures to protect national
interest and economy

✓ Be cautious of the negative impact of globalization towards to achieve a sustainable growth.

Ex: Creating environmental friendly economic concepts.
 REFERENCES

Bauernfeind, M. (2006) Drivers of Globalization: Integration of Theories and Models. EBL [Onlin
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Czinkota, M. (2011) What drives globalization?. Michaelczinkota [Online]. Available at: <
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November 2017]

DHL (2017), The 21st century spice trade - A guide to the cross-border e-commerce opportunity,
December 2017 [Online]. Available at: <
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Erken, H. (2017) US global value chain integration: a major impediment for trump’s protectionist
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 REFERENCES

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[Online]. Available at: <https://www.linkedin.com/pulse/emerging-markets-growing-faster-
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Hill, C, W, L. (2013) International business. 9th ed. US, McGraw-Hill Education

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 REFERENCES

Ingram, D. (2017) What are the positive effects of globalization in business. Bizfluent [Online].
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International Migration Report (2015) [Online]. Available at: <

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Ogaboh, A, A, M and Odu, E. (2013) Globalization and the challenge of industrialization in

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pp. 41-47.

PWC (2017) Sizing the prize - what’s the real value of AI for your business and how can you
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QUESTIONS AND ANSWERS